Micro-Rebate Schemes in Pakistan’s FMCG Distribution Channels: A Field Experiment with Retailers

Abstract

This paper discusses how micro-rebate schemes used in the fast-moving consumer goods (FMCG) industry in Pakistan have affected the purchase by retailers and added retailer loyalty. Micro-rebates are in the form of small, per unit incentives to retailers to promote the sale of product. The idea of this research is to determine the effectiveness of such scheme to improve the performance of the retail industry in the emerging market.To examine how retailer behavior is affected by micro-rebate based incentive, a field experiment is achieved in the FMCG market in Pakistan with 150 retailers.The research question that the study aims to address has been defined as follows: How do micro-rebate schemes impact retail performance in the FMCG market in Pakistan?

The treating group and the control group have been randomly chosen among the retailers. The micro-rebates in particular products were given to the treatment group. In the study, the regression analysis method and difference-in-differences (DiD) were applied in measuring the variations in sales and loyalty over the six months period.Retailers that received the micro-rebate scheme increased their sales by 15% and highly improved loyalty as reflected in the repeat orders and longer business careers.In the FMCG industry of Pakistan, micro-rebate schemes are successful in enhancing the sales of retailers and building loyalty. Recent findings have indicated that micro-rebates can be employed by the FMCG companies to help them optimize their distribution chains.

The number of 150 Pakistan retailers will be used to collect the data, which shall be collected during the period January- June 2024.In treatment group, there was an increase of 15 percent of sales. Excessive rise in the loyalty of the retailer (p < 0.05).By using micro-rebates, FMCG businesses can enhance their sales and build a better relationship between them and the retailers. The paper will add value to the comprehension of micro-rebate programs in emerging economies such as the Pakistani marketplace, which can be helpful to the knowledge base of FMCG companies investing in them.